Sun Resorts goes into the red with Rs 43.9 million pretax loss in 2013

Mauritius-based luxury hotel group Sun Resorts went into the red in 2013 with an annual pretax loss of Rs 43.9 million against a profit of Rs 7.07 million in 2012,according to results released on Wednesday.

The group noted that Ambre, its four star resort on the East of the island, experienced a difficult first year in a highly challenging environment and posted a significant loss for 2013.

While all the Mauritian resorts registered growth in operating profit year on year, the full year impact of Ambre resulted in the group’s operating profit decreasing by 19% on 2012 and a resulting loss of Rs 32 million for the year, at a post-tax level.

However, group revenues did not disappoint and rose 12% toRs 4.1 billion for the year ended 31 December 2013, on account of the improvedperformance of the Long Beach property on the East coast and a full year operation of Ambre.

Analysts noted that Ambre has yet to recover the costs of a 10 million euros refurbishment in 2012. Besides it depends heavily on French tourists, whose numbers have declined by 4.7% over 2012.

Tourist arrivals from Europe fell by 1.5% last year, even as total visitors to Mauritius rose 2.9% last year.Arrivals from emerging markets grewsignificantly and compensated the shortfall from Europe, with the Far East and Asianmarkets registering 25.7% growth.

Sun Resorts, which has hotels in the Maldives as well, also noted that the Maldives hotel sector enjoyed 17.4% growth intourist arrivals, with China consolidating itself as the island’s main tourists’ provider.

Overall, the group posted a loss per share of 0.34 rupees against earnings per share of 0.17 rupees in 2012.

Earlier this week, the group announced that Mauritian conglomerate CIEL is taking ‘effective control’ of Sun Resorts, by buying out GML’s share in the resorts chain. The cautionary announcement noted that this transaction would increase CIEL’s shareholding in Sun by 10% to 39.32%.

Moreover, in line with takeover rules, shareholders and the public were informed that CIEL would make an oﬀer to Sun shareholders around 2 months from the date of the CIEL transaction, and the oﬀer would remain openfor 35 days with a price of Rs 41 per share.

In the same cautionary announcement, Sun Resorts highlighted that it would reposition its business model and roll out its new strategy, partner with world-class international hotel operators and strengthening its financial structure.

In this context, Sun Resorts noted that it had entered into an agreement withglobally renowned luxury hotel chain Shangri-La Asia Limited, for long-term management and minority participation of 26% in a new company which would own Le Touessrok, a resort on the West Coast. This agreement was howeversubject to government approval, the company noted.

The group also observed that it had entered into negotiations with GML group companyAlteo Limited regarding the potential acquisition of a 50% stake in Anahita Hotel Limited, which owns the Four Seasons Resorts Mauritius at Anahita.

To conclude, the luxury hotel chain said it intends to undertake a rights issue of Rs 1.2 billion to be offered to all its shareholders in order to enable the company to reduce its leverage position, innovate and pursue its growth strategy.

Image (Ambre): The group noted that Ambre, its four star resort on the East of the island, experienced a difficult first year in a highly challenging environment and posted a significant loss for 2013.